What it does
A fair value gap is a three-candle imbalance. Price moved so quickly that the wick of the first candle and the wick of the third candle never overlap, leaving a gap where very little trading took place. Price often returns to these gaps to fill them, which makes them useful areas for entries, targets and stops.
Goldsands Fair Value Gaps draws each gap from the first candle of the pattern, so the box sits exactly between the two wicks that created it. A dotted line marks the halfway point, known as consequent encroachment, which many traders watch as the key reaction level. A minimum-size filter based on the market's normal range keeps tiny, meaningless gaps off your chart.
You choose when a gap counts as filled: when a wick fills the whole gap, when it reaches the halfway line, or only when a candle closes beyond it. The box stops at the candle that fills it. If you prefer, it can shrink as price trades into it, so you only ever see the part that is still open.
Key features
- Bullish and bearish fair value gaps drawn between the two wicks that created them
- Dotted 50% line (consequent encroachment)
- ATR-based minimum size filter
- Choose when a gap is filled: full wick fill, halfway line, or candle close beyond it
- Optional shrinking boxes that only show the part still open
- Alerts for new gaps, price entering a gap and gaps being filled
Questions
What is consequent encroachment?
It's the halfway point of a fair value gap. The indicator marks it with a dotted line because many traders watch it as the key reaction level.
When does the indicator treat a gap as filled?
You choose: when a wick fills the whole gap, when price reaches the halfway line, or only when a candle closes beyond it.
Which platforms is it available for?
MetaTrader 5, cTrader, TradingView and FX Replay.
Goldsands Fair Value Gaps is an analysis tool. It doesn't give trade signals or financial advice, and how price has behaved around a level in the past doesn't guarantee how it will behave in future.
